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Strategies & Market Trends : Graham and Doddsville -- Value Investing In The New Era

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To: Freedom Fighter who wrote (10)3/5/1998 12:51:00 AM
From: Berney  Read Replies (2) of 1722
 
Wayne, I would be interested in learning how you and others determine the PE ratio for the DJIA & S&P 500. Here's my problem: I show three stocks (BA, IP and EK) with an "NM" PE. Doesn't that make the PE ratio for the DJIA "NM". You indicated that the current PE ratio for the DJIA is 22X. Every time I try this exercise, I get sandbagged by at least one stock.

For example, one quote service had the PE of EK to be over 6000. Wouldn't this add 200 to the PE of the thirty DJIA stocks? Or, are we just supposed to ignore those stocks that don't fit neatly into the puzzle?

Appreciate your response as this has been baffling me for several years.

Berney
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